Monday, March 2, 2015

Key Senate Republican committee chairman Orrin Hatch (UT), John Barrasso (WY), and Lamar Alexander (TN) have an op-ed in the Washington Post today saying they have a plan if millions of Americans lose their Obamacare subsidies this summer.

First, I have no idea how the Court will rule, likely in late June. While it is hard for me to see Chief Justice John Roberts voting to strike a major blow to the new health law now when he had that same chance three years ago and didn't, no one can predict what is going to happen this time.

But if the Court does throw the subsidies out in late June, it will mean that the Obamacare insurance subsidies would no longer be available to millions in as many as 37 federally-run states come August 1.

Realizing just what chaos this would cause, these three senators wrote:

First and most important: We would provide financial assistance to help Americans keep the coverage they picked for a transitional period. It would be unfair to allow families to lose their coverage, particularly in the middle of the year.

They provided no more detail except to say they have had discussions with House and Senate Colleagues and that there is "a great deal of consensus on how to proceed."

I don't doubt their intentions, but it would be nowhere so easy.

A few questions:

Will the full Congress pass, and the President sign, such a subsidy safety net before the Court rules, or at least by August 1 when the subsidies would end? If they end for even for one month, we are going to have chaos in the health insurance markets with uncertainty over whether people are covered or not.

And, don't presume passage of such a simple fallback will be simple. Just look at the current chaos in the Republican-led Congress over funding the Department of Homeland Security with the new Republican majority not able to agree amongst itself on how to continue paying the people that are now protecting our borders.

While I have no doubt these three Senators would be willing to vote for a clean subsidy extension––just as they recently voted for a clean Department of Homeland Security extension––what will their Tea Party colleagues in the House be willing to vote for who seem adamant that Obamacare can't crash and burn quickly enough?

What conditions will Republicans attach to any extension?
Undoubtedly, many Republicans will want to attach conditions to any subsidy extension that the President will find problematic.

In fact, Hatch, Barrasso, and Alexander are saying in their op-ed that they "will give the states flexibility to create better more competitive health insurance markets offering more options and choices." Such conditions will undoubtedly be veto bait for President Obama.

How long would the extension be?
The Republicans are not going to grant an indefinite extension. That would be tantamount to just fixing Obamacare which is something Republicans are clearly not going to do.

So, they will want to put a deadline on any extension in order to maintain pressure on Democrats to eventually recast the new health law their way.

A separate Republican suggestion by Nebraska Senator Ben Sasse is to create a reprieve if the Court
rules against the subsidies by giving consumers a Cobra-like 18-month
subsidy extension. An 18-month extension would take us to the end of 2016 meaning this Congress and this President would have to agree to substantial changes to Obamacare before Barack Obama leaves office. And that would be a heavy lift to say the least.

My sense is that in order to avoid a stalemate with this President, and something tantamount to a "fiscal cliff" over health care, the subsidies would need to be extended until at least the end of 2018. Doing so presumes the new Congress and President can reach an agreement in the first half of 2017 and then the market, the states, and the feds would have only about 18 months to put the new deal in place. Remember, the Obama administration had 3 1/2 years to implement Obamacare and we know what happened.

An extension to the end of 2018 would also put Obamacare front and center on the 2016 election-year agenda with the winners hopefully having a mandate to fix the health law.

Conservative Republicans will have a tough time letting Obamacare stay in business that long worried that the law will just become even more entrenched if it is not quickly rooted out.

So, the simple assurance that Republicans have a plan to avoid any major disruption to Obamacare from an adverse Supreme Court ruling may not be so simple.

Wednesday, February 18, 2015

Here is what President Obama said in a recent video, "The Affordable Care Act is working. It's working a little better than we expected."

On Tuesday, the administration announced that 11.4 million people signed up for Obamacare in the second open enrollment.

That number is higher than the number that will ultimately pay for their coverage and complete the enrollment. Even after they complete signing up the stragglers, it is more likely the paid for number will be about 10.5 million based upon a number of conversations I have had with carriers.

But let's assume they end up with as many as 11 million people. Would that exceed expectations?

Here is what the Congressional Budget Office projected in May of 2013:

Tuesday, February 10, 2015

House Energy and Commerce Chairman Fred Upton along with Senate Finance Chairman Orin Hatch and Senator Richard Burr have outlined what is, at least for now, the Republican alternative to Obamacare.

Republicans will now argue they have a better health insurance reform plan and that Obamacare should be repealed and replaced by it––particularly if the Supreme Court plunges the new health law into chaos by throwing the subsidies out in 37 states.

They will have an uphill battle. Not because these Republicans don't have a lot of good ideas, but because they have put a list of big and complicated changes on the table. Lots of people may not like Obamacare but Republicans have now really muddied the waters with a huge take it or leave it alternative that will have plenty of its own reasons to give voters pause.

My sense is that voters will end up liking parts of both Republican and Democratic ideas. They might ask a reasonable question: Why can't we take the best from both sides?

If Democrats would just admit Obamacare needs some pretty big fixes, and Republicans would be willing to work on making those fixes by putting some of these good ideas on the table, the American people would be a lot better off.

In fact, I am hopeful that this is eventually what will happen once Obamacare's failings become even more clear (particularly the real premium costs) and both sides come to understand that neither will have a unilateral political upper hand. See my recent op-ed on how to fix Obamacare here.

Let's take an in-depth look at the Republican alternative, "The Patient Choice, Affordability, Responsibility, and Empowerment Act."

Of course that begs a question, Just what should we do to make health insurance reform politically and financially viable?

Proposals the Republicans are now considering will have no chance of getting by a Presidential
veto––even if they can muster 60 votes in the Senate––so long as Obama is President. Even if the
Supreme Court takes away insurance subsidies in the state exchanges I
doubt this President and this Congress can agree on anything.

But in 2017, it will be a different matter. I really do expect the new President, Democratic or Republican, as well as the new Congress, will be anxious to move on past this long and tedious health care debate to other important issues.

Whoever wins the 2017 elections, I have no doubt the consensus will be that health insurance reform will need lots of reforming. And, the only way that will happen is when one political party is able to bring lots of members of the other party on board.

Democrats might think Obamacare will survive intact. It won't. Five years later it has failed to garner the support they thought it would.

Republicans might think they can do a unilateral conservative health insurance reform in 2017––just like the Democrats rammed their version through in 2010. They won't. The country has had enough of that.

Monday, January 5, 2015

For 25 years I've been saying that I wished a little state like Vermont would implement a single-payer Canadian-style health insurance system––"Medicare For All." My argument has always been that such a small and limited experiment would give us the opportunity to see the ideological arguments for such a system play out in the face of fiscal reality and the stakeholders fighting it out in the political arena over who would get the money. The rest of the country would be able to learn a lot from it.

Monday, December 29, 2014

I was reading the December 18th issue of Inside Health Insurance Exchanges and came across an article entitled, "New Kids on the Block Come Out Swinging; Co-Ops Lower Rates for Many Health Plans."

The gist of the article had to do with the success a number of Obamacare insurance co-ops have had in charging lower rates and getting lots of market share by "[underpricing] more established players inside and outside of the public insurance exchanges."

The article went on to point out that some traditional competitors are beginning to complain that the co-ops have unfair advantages.

This quote from the CEO of CoOpportunity––the market leading Iowa and Nebraska Obamacare funded co-op that enrolled 120,000 people in 2014––stood out:

For Blues plans and other carriers "with deep reserves, booming stock prices and market entrenchment to plead for relief from these nimble, undercapitalized start-ups is ludicrous and insulting," counters CoOpportunity Health CEO Cliff Gold. He says his company has been successful in attracting customers in two states despite not having the lowest cost products anywhere in Iowa or the most populous part of Nebraska. "At the end of the day, in the long term, success is determined by a company's ability to create value for customers, he tells HEX. "That critical but elusive combination of price, product features, provider network, and customer service is what separates competitors."

Here's the letter that Mr. Gold received a week later on Christmas Eve:

Thursday, November 13, 2014

The answer is that this enrollment process is so screwed up we will have no earthly idea how many new people have enrolled and how many 2014 enrollees remained on the program until at least April 2015.

Monday, November 10, 2014

Well, with an estimate of only 9 million to 9.9 million, apparently they are. But I will suggest the focus should not be on anybody's estimate for 2015 but rather on how many people need to enroll in Obamacare to make it sustainable.

Friday, November 7, 2014

In a Wow moment, the Supreme Court announced Friday that they will take one of the four pending "Halbig" cases––specifically King v. Burwell.

The issue is over whether the new health law actually authorizes the payment of premium subsidies in the 37 states that will rely upon the federal government to run their exchange in 2015.

This effort is being made on a number of fronts but has been generally know as the "Halbig" challenge. I guess we will now call it the King challenge.

If the Supreme Court eventually affirms this challenge, anyone receiving a health insurance subsidy in the 37 states run by the feds would immediately lose it. Given that the bulk of those currently getting subsides are at the lower income range for those subsidy eligible, most would likely drop their Obamacare insurance unless they were so sick it made sense for them to beg, borrow, or steal the money they would need to continue making premium payments.

Wednesday, November 5, 2014

A year after Obamacare went into effect and Democrats said people would come to support it voters gave one Republican candidate after another, who made Obamacare a big part of each of their campaigns, one victory after another.

So, how will the Republicans use their convincing result on Obamacare?

Friday, October 31, 2014

That was the lead in a Reuters story this morning saying, "health plans expect at least 20% growth in customers and in some states anticipate more than a doubling in sign-ups" from the 2015 Obamacare open-enrollment.

Sunday, October 19, 2014

Hanging around actuaries as long as I have one of the old sayings I picked up was, "Figures don't lie, but liars figure."

I have read one story after another this summer and fall about the modest Obamacare rates increases––or decreases––for 2015.

On this blog you have also seen me write about the complex way the 2015 Obamacare rates will hit people particularly because of the impact the changes in the so called second lowest cost Silver plan will have on so many people's final subsidy. You have also seen me write about the fact that we really won't know what Obamacare costs people until the now unlimited Obamacare reinsurance program stops subsidizing insurance rates in 2017.

Recently, the Kaiser Family Foundation provided a report pointing out that the cost of the benchmark Silver Plan would fall 0.8% in sixteen cities they researched:

Wednesday, October 1, 2014

The Affordable Health Care Act's Launch On October 1st––So How Did it Go?

Unavoidably, that will be the big question come Tuesday.

But there will be much more to it than that.

A 180-Day Open Enrollment––Not a One-Day Open Enrollment
What
happens on the first day, for good or bad, will constitute only a tiny
percentage of the open enrollment period. Consumers will likely visit
the new websites many times before they make any decisions, and that is
exactly as it should be.

Friday, September 19, 2014

The administration finally released the Obamacare enrollment count this week.

Like everything else about their scorekeeping we got a number. Just one number. A number that was conveniently better than we had expected. And, we got no real context for the number or any of the back-up information.

Sunday, September 7, 2014

So quiet, that there has been a flurry of articles recently over how Obamacare has dropped to a second or even third tier issue and will hardly matter come election-time.

Wishful thinking.

Obamacare has largely been out of the news cycle for a couple of months but that is about to change.

A few thoughts.

The 2015 rate increases have been largely modest. Does that prove Obamacare is sustainable? No. You might recall that on this blog months ago my 2015 rate increase prediction was for increases of 9.9%.

Tuesday, July 22, 2014

Today's 2-1 decision by the DC Court of Appeals striking down federal premium subsidies, in at least the 27 states that opted for the feds to run their Obamacare insurance exchanges, has the potential to strike a devastating blow to the new health law.

The law says that individuals can get subsidies to buy health insurance in the states that set up insurance exchanges. That appears to exclude the states that do not set up exchanges––at least the 27 states that completely opted out of Obamacare. Another nine states set up partnership exchanges with the feds and the impact on those states is not clear.

The response by supporters of the law, and the IRS regulation that has enabled subsidies to be paid in the states not setting up exchanges, hinges on the argument that the language is at worst ambiguous and the Congress never intended to withhold the subsidies in the federal exchange states.

But in the DC Court ruling one of the majority judges said, "The fact is that the legislative record provides little indication one way or the other of the Congressional intent, but the statutory text does. Section 36B plainly makes subsidies only available only on Exchanges established by states."

My own observation, having closely watched the original Obamacare Congressional debate, is that this issue never came up because about everybody believed about all of the states would establish their own exchange. I think it is fair to say about everyone also believed a few states would not establish their own exchanges. Smaller states, for example, might opt out because they just didn't have the scale needed to make the program work. I don't recall a single member of Congress, Republican or Democrat, who believed that if this happened those states would lose their subsidies.

Washington Post's Wonkblog "Pundit of the Year"

Bob Laszewski was named the Washington Post's Wonkblog "Pundit of the Year" for 2013 for "one of the most accurate and public accounts" detailing the first few months of the Obamacare rollout.

"Top 5 Speaker on Health Care"

Bob Laszewski has been named a "Top 5 Speaker" on health care in a survey involving 13,000 business leaders, educators, association members, and others.

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The purpose of thishealth care blogis to provide an ongoing review ofhealth care policy activity in Washington, DC and the marketplace.

Health Policy and Strategy Associates, LLC (HPSA) is a Washington, DC based firm that specializes in keeping its clients abreast of the health policydebate in the nation's capital as well as developments inthe health care marketplace.

HPSA is not a lobbying firm. Our niche is objective non-partisan information on what is happening in the federal health policy debate and in the market.

Robert Laszewski, Washington, DC

Robert Laszewski is president of Health Policy and Strategy Associates, LLC (HPSA), a policy and marketplace consulting firm specializing in assisting its clients through the significant health policy and market change afoot.
Before forming HPSA in 1992, Mr. Laszewski was chief operating officer for a health and group benefits insurer.
The majority of Mr. Laszewski’s time is spent being directly involved in the marketplace as it comes to grips with the health care cost and quality challenge.